Nudge, Nudge, Wink, Wink: Behavioural Modification, Cy-Pres Distributions and Class Actions

Abstract

Jurisdictions that have created class action regimes provide as one of their justifications the promotion of behavioural modification or deterrence of wrongdoers. Peculiar to some class action regimes is the phenomenon of cy-pres distributions, in which the class counsel and judge choose a form of distribution for class members. The justification for cy-pres distributions is to ensure that a defendant receives nothing back from the monetary award and is thereby required to internalize the true cost of wrongdoing, or to disgorge the profits of wrongdoing. The cy-pres remedy is seen as furthering the deterrence function of class actions. I argue that it is difficult to find empirical evidence to substantiate the claim of behavioural modification in class action litigation. However, if courts are serious about deterrence, then I suggest that reorienting the focus of cy-pres distributions to properly account for behavioural modification may provide a better chance of that outcome.

Debate over the function of cy-pres distributions and deterrence in class actions occurs at a time when within the law of remedies there is increasing evidence which demonstrates that plaintiff sometimes prefer other remedial outcomes than slavish adherence to compensable damages. A collateral benefit to a realignment of cy-pres distributions along the lines I suggest may in fact make a better fit with what class members may really want by way of a remedy.